Municipal spending out of step with reality

Municipal spending in Halifax is quickly outpacing population growth and inflation as employee wages and benefits drive up the bottom line, a new report says.

Households in the region shelled out an extra $4,300 over the last decade, largely to cover gold-plated pension plans and other costly benefits, the Canadian Federation of Independent Business said in a report Wednesday.

“Spending is out of control in Canadian municipalities,” the report said, noting that “the lion’s share of municipal spending goes to employee wages and benefits” that are above private-sector norms.

Halifax’s inflation-adjusted spending increased by 54 per cent between 2001 and 2011, while the municipality’s population only inched up nine per cent during the same period, the report found.

The gap is even more staggering in Cape Breton Regional Municipality, where inflation-adjusted spending rose by 37 per cent over a 10-year period that saw the population drop by nine per cent, the business group said.

“This trend is not sustainable without significant increases in taxes and/or fees, something most taxpayers have little appetite for,” the report said.

But a Halifax Regional Municipality spokeswoman said that while spending may have increased over the past decade, so have services for residents.

“The municipality has made major expansions to transit services with new routes and 145 additional buses,” Jennifer Stairs said.

The new routes have required more bus drivers, mechanics and other staff, Stairs said.

Moreover, the region has added 126 more police officers, an increase of more than 33 per cent in a decade.

Also, the municipality maintains 290 more kilometres of roads, a 20 per cent increase over the 10-year period, and there are also new community centres and other municipal facilities, such as the Emera Oval.

Still, the business group called much of this spending excessive.

The report said municipalities need to rein in expenses and keep future operational cost increases in line with inflation and population growth.

Moreover, the business group said in the report that municipalities need to bring public salaries, wages and benefits in line with the private sector.

The group added that the provincial and federal governments should freeze funding to cities until they better manage their spending.

Jennifer English, the business group’s senior policy analyst for Nova Scotia, said municipal spending is out of step with reality.

“We’re not saying that spending, in all cases, is bad, but spending when it’s wildly out of step with inflation and population is detrimental to the economy and the community.”

However, Stairs said inflation has hit municipalities harder than the consumer price index.

She also said it’s misleading to say spending should be tied to population growth, given Halifax’s costs are also driven up by the number of homes, not just the number of people.

“Dwellings and inflation together are up 53 per cent from 2001 to 2014,” Stairs said. “Although household size is falling, every new home still needs municipal services like streetlights, garbage collection and snow plowing.”